Fort McMurray fire: Home insurance and clean up tips

(Ryan Remiorz/The Canadian Press via AP)

The fires raging through northern Alberta have galvanized a province and moved a country. The images are horrific. The stories are both inspirational and heartbreaking. It’s a story close to my heart (despite the almost 4,000 kilometres that separate me from Fort McMurray). I spent almost a decade as a resident of Calgary, Alberta before moving to Toronto. I still have friends living throughout Alberta and two very near and dear friends work close to the now devastated city. My friend Neal is a family man who is counting his blessings each day, despite the oil camp lockdown and the thousands of displaced Fort Mac-residents that had flooded into his oil-worker’s camp. The other is my dear friend Ron, also a family man and no stranger to the struggle of having to rebuild his life.

Since pictures of the raging fires were first aired earlier this week, I’ve been reaching out to those I love. A simple act that has been repeated by thousands of people all across Canada. Initially we all thought that the evacuation of more than 80,000 people would last a day or two. Then the wind shifted. The pictures started flooding in. More evacuations were called. Now it appears evacuation orders may last longer. Much longer.

What’s worse is that when these families are finally allowed to return home, there may not be a home to return to. That’s when the tiring, tedious process of picking up the pieces truly starts.

Thankfully, most homeowners in Canada carry home insurance coverage—the most cost-effective protection from catastrophic loss and damage—the kind of damage caused by the Fort McMurray fires. But even with this coverage, recovery from a disaster or emergency can be a long and tiring process. The key is to look after yourself and your family and to try and return to familiar routines as soon as possible. To help, here’s a rundown of some simple steps to take to maximize your coverage and cope in the aftermath.

During the evacuation order

If you’re at home

If you’re at home when the emergency situation strikes, follow your emergency plan. Get your kit, contact those that need to be reached (if possible) and make sure you’re safe before assisting others. If possible, keep a radio or TV on so you can hear updates about the situation. Don’t evacuate your home—where you have the best chance of survival—unless told to do so by local officials.

Leaving your home

If you are ordered to evacuate make sure you take your emergency kit, your written emergency plan (it should have relevant contact numbers), all essential medications and copies of prescriptions, a cell phone, and your pets (just keep in mind that pets are not allowed in some emergency shelters).

If you have time, before you vacate your home, take precautions. Shut off water and electricity at the main shut off valve and the circuit-breaker panel, but leave your natural gas service on (unless officials tell you to turn it off). If you do turn off your gas, remember that you will need to wait for your local gas company to come and reconnect it and, in a major emergency, it could take weeks for a professional to respond.

Once this is all done, close and lock all windows and doors and evacuate to designated shelter.

Helping children cope

Children will pick up on family concerns or may have their own fears. Parents can help by acknowledging their concerns, answering their questions simply and honestly, and helping them understand that they are loved and protected. For more on helping children, see FEMA on Coping with Disaster.

After the evacuation order

Returning home after the fires

You won’t be able to return home until you get the all-clear from emergency personnel, but once given, it’s a good idea to return to your home to see what can be saved and salvaged. Just don’t be surprised if you feel more than a bit overwhelmed.

The loss of your home and a lifetime of memories can be a shock. To help, concentrate on the task at hand: assessing the situation. You’ll want to determine what, if anything, can be saved or salvaged. Consider keeping kids away from the site and from any clean-up in the area. The devastation can be scary for little ones and there could be contaminants on the ground or sharp debris that can cause serious injury.

While at your house check for strange odours, the smell of gas or a hissing sound. If you smell anything unusual, leave the house immediately. Also, don’t use electricity, gas or water until emergency teams or utility companies have given the thumbs up to do so.

Finally, before you leave (or before you pick up a broom or scrub brush), call your insurance provider. This is an essential first step to getting financial compensation for your loss and must be done before anything is touched or altered at your damaged or destroyed home.

The clean up

Entering your home

If your home was badly damaged—there is roof damage, cracks in the walls, or the foundation appears to have shifted—do not enter your home. Instead, consider calling a building inspector or engineer. If neither one is available then wait until your home insurance adjuster gives you authorization to enter the premises. This can mean having to wait days until an adjuster is available, or weeks until engineers are free, but it’s better than risking your life in an unstable structure. If your home is unsafe or uninhabitable, secure it as best as possible and wait for the insurance adjuster assessment.

Even if there doesn’t appear to be dangerous structural damage, you should still proceed with caution when entering your home. Use a flashlight to inspect walls, ceilings and floors. Look for sagging floors, which may indicate damage to foundations, and sagging ceilings, which may indicate roof damage—if you see evidence of any, leave your home immediately.

If the foundation, walls and ceiling all appear to be intact, turn your attention to gas and water leaks. Again, if you smell a strange odour or hear hissing, leave the house immediately and call the appropriate authorities.

At no time should you or family members drink any water from taps or tanks. Water can be contaminated at a number of sources. Instead, consider travelling with a basic necessities kit for each family member. The kit should include: non-perishable food (typically, canned or jar food), bottled water, any personal or over-the-counter medications, as well as a flashlight and batteries. Keep this kit with you throughout the ordeal.

Once you’ve verified that your home is safe to enter, start taking lots of pictures of the damage. Use a digital camera or your smartphone and try to capture as much evidence of the damage as possible. You could also take a video walk-through of your home. Narrate the video by explaining what was lost in the fire. These photos and videos will go a long way to helping your insurance adjuster assess the extent of the damage at your home and may be used in your adjuster’s insurance assessment of the damage.

Guidelines for cleaning up

Once given the go-ahead by your insurance company and by emergency personnel you can start to clean up the damage. Just remember, though, that the clean up will be a slow process. To help follow these guidelines:

Do not enter a flooded basement unless you are sure the power is disconnected.
Check the furnace flue, if it’s disconnected, and check the flue pipe for holes or damage. Using a furnace that’s not properly installed can cause carbon monoxide to leak into the home and this can lead to death.
Before using any outlet or electrical switch, have an electrician check it out.
Only power on the main electrical switch after getting an electrician to verify that it’s safe. Then give the electrical system a chance to stabilize before reconnecting tools and appliances. To help stabilize your system, turn your thermostats up first, then after a couple of minutes reconnect the fridge and freezer. Now, wait 10 to 15 minutes before reconnecting all other tools and appliances.
If you managed to shut off your water before the disaster, turn it on. Close lowest valves/taps first and allow air to escape from upper taps.
Make sure that the hot water heater is filled before powering it on.
As a general precaution, throw out all perishable food (food kept in the fridge, freezer and pantry that is not canned). The rule with food after a disaster is when in doubt, throw it out!

Cleaning tips for after the disaster

Now that you’ve followed all the advice and precautions, it’s time to actually tackle the damage and debris. The easiest way to handle such a large task is to tackle one room at a time and to work in a well-ventilated area.

Wear protective gear: gloves, goggles and even a full-body protective suit can all be bought at most hardware stores and can help minimize your contact and exposure to harmful contaminants.

If possible, use a two-bucket approach when cleaning: one bucket for rinse water and the other for the cleaner (this keeps most of the dirty rinse water out of your cleaning solution). Replace the rinse water frequently and avoid using contaminated water.

Using appliances after the disaster

Don’t plug in or use any appliance that are wet or severely damaged. Where possible have an electrician inspect each appliance and electrical outlet. If that’s not possible, then cautiously inspect lines and connections to make sure all are free from dirt and contaminants.

Consider cleaning and disinfecting washing machines, dryers and dishwashers with drink-safe water before using them. Check the foam insulation and sealed components on refrigerators and freezers for damage. If everything appears in good, operational condition then empty, clean, and disinfect the appliance or have it checked out by a professional.

If your electrician or your insurance adjuster suggests that an expensive appliance should be replaced, then get this in writing and discuss it with your insurance adjuster before purchasing another one.

Stay prepared

Remember, once you’re done assessing and cleaning up the damage, restock your emergency kit so the supplies will be there when needed again. For a comprehensive how-to on cleaning up after emergencies, see the Red Cross Manual. For what should be included in a basic emergency kit, see the guidelines on the Government of Canada’s Get Prepared site.

What to expect from your home insurance

Paying a mortgage on a destroyed home

Your home has been destroyed. You and your family have nowhere to live, but you still have an outstanding mortgage. Now what?

For most homeowners this means continuing to pay your monthly mortgage based on the initial terms you agreed upon when you first negotiated the mortgage. But that doesn’t mean you’re paying for a home that doesn’t exist. It just means you continue to pay off your home loan, while your insurance provider works hard to rebuild that home. During this time, you and your family will live in a temporary home (either a rental or a hotel), a cost your insurance company pays for until your home rebuild is complete. (For more on rebuild options, see Are Fort McMurray homes insured for fire?)

Still, it may be wise to review your home mortgage documents or to speak to your mortgage advisor. Some mortgage loans allow you to skip payments or make interest-only payments for a specified period of time. While this is not wise from a financial perspective, as it adds time and interest costs to your overall loan, is could be a good option if you’re feeling the financial pinch of living in a disaster zone.

It’s also wise to talk to your insurance provider to determine whether or not you have an option not to rebuild. While most home insurance policies won’t give you a choice, some providers have limits or conditions that enable a homeowner to take cash-value for their destroyed home, rather than spend the proceeds on rebuilding. Just don’t expect a fat cheque from your insurance provider, at least not until your bank or mortgage lender is paid what is owed on the remaining mortgage balance. Remember, your lender is also named on your home insurance policy, so they have a secured interest in the loss settlement from your insurance provider. This means they have first dibs on the insurance proceeds paid out, equal to the outstanding balance on your mortgage, plus any accrued interest or penalties.

Will my mortgage interest rate increase?

If you locked in at rock bottom interest rates that were offered a year or so ago, you might be a bit concerned that by the time your home is rebuilt, rates will have gone up. The good news is that most Canadian home insurance policies protect you from rate increases. Known as “mortgage rate protector” this coverage protects you from having to reset your mortgage at a higher rate, after a sudden, dramatic loss.

For example, if you first got your mortgage a year ago you could have negotiated a five-year fixed rate at 2.25%. After the Fort McMurray fires and the rebuild that same five-year fixed rate could creep up to 2.75%, or more. With the “mortgage rate protector” your insurance provider pays the difference between your original mortgage rate and the higher rate for the remaining portion of your original mortgage term. (For other unexpected coverages, see our previous post.)

What’s not covered

Bylaw changes

Unfortunately, though, not all costs are covered under a comprehensive home insurance policy. Building codes, for instance, will often tack on thousands in extra rebuild costs—costs that are not covered under regular home insurance policy.

That’s because what was built in 1985 is insufficient for rebuilding in 2015. If, however, you paid for bylaw coverage—extra protection that’s added to your home insurance policy—you won’t have to pay out-of-pocket to comply with the up-to-date bylaws in Fort McMurray, or wherever you need to rebuild.

For more on coverages that are not included without a separate rider added on to your home insurance policy, see my previous post.

Is your settlement fair?

After all is said and done, you’re now in a position to understand the importance of home insurance coverage. While insurance settlements are not windfalls, they are there to minimize the financial impact of unexpected and expensive situations, like a catastrophic fire.

To understand whether or not the settlement offered by your insurance provider is fair, consider how a claim is processed.

If the insurance adjuster estimates the cost to replace and repair your home and belongings at $750,000 plus HST, then you’ll need to remember that your coverage doesn’t actually cover tax, so that portion of the bill will actually be an out-of-pocket expense.

If the policy is based on “actual cash value” (ACV) then your insurance policy will only pay the depreciated value of each possession listed in the claim. For example, if you paid $10,000, five years ago, for a new asphalt roof with a guaranteed 25-year lifespan, you’d only get $8,000 (the cash value of a roof that had depreciated in two years by 20%).

Most policies, however, now use a guaranteed replacement value (GRV) up to a maximum amount. For example, if your capped coverage is $1 million, then the cost to rebuild your home and replace your belongings cannot exceed that amount. Keep in mind, however, that even with a GRV in place for your house rebuild, the claim for personal belonging replacement may still be subject to ACV calculations. Read your policy to determine how coverage costs are calculated on your home and belongings.

Also, don’t forget to subtract your deductible from the final claim coverage amount offered by your insurance provider. For example, if your deductible is $1,000 you’ll receive $750,000 less $1,000. If you have more than one deductible, you’ll have to reduce your claim amount by each deductible.

For help in determining if your home insurance settlement is fair, read my previous post on the topic.

For those that want to help

For those of us that want to help, here’s our round-up of how to donate or help to those affected by the fire. If you’re in the surrounding area and want to offer up your home for displaced residents, Airbnb is coordinating free accommodation and waiving all service fees associated with short-term rentals.

Finally, I just want to send out my well-wishes and best thoughts to all those caught in this Albertan tragedy. I commend all those that filled up their vehicles with extra fuel and food and gave it out, for free, to the evacuees; I salute the first-responders and emergency personnel that have worked tirelessly to try and contain the damage (at times, what appeared to be a no-win battle). And I thank the Red Cross, Airbnb, the RCMP and the Canadian Government for stepping up to help.

And to Neal and Ron: My thoughts and prayers are with you and your loved ones.